Ardita SEKNAJ Causes and effects of trade wars - Winners and losers

Causes and effects of trade wars Winners and losers EXPERTS'S FORUM www.aab.al

The China – US currency war and the mutual depreciation of their currencies, the USD and the yuan, could provoke a rise in the value of the Euro, lower the competitiveness of its industrial exports, posing the risk of an open war on import – export sector of automobiles and agri-food products, increasing the risk of recessionist tendencies.

world trade, such a situation had not been seen since the 1930s, in the context of effects produced by the "Great Depression".

For President Trump, "resentment" with China had begun since 2016, during the election campaign, when China was accused of “raping” the US and that it was "the greatest theft in the history of the world". The largest exporting power of the planet, since 2009, and then the first place in the world economy in 2014 had to face the famous slogan: "Make America Great Again"; some US$ 558 billion of Chinese exports to the U.S. in 2018, in front of US$ 178 billion of US exports, with a trade deficit of US$ 380 billion. The US administration thought that China I n March 2018, just ten years after the outbreak of the global financial crisis, Mr. Donald Trump, the US President, said: "trade wars are good and easy to win." It was about the commencement of a major US – China trade conflict, which would gradually engulf states and even continents, with the most unpredictable effects and consequences. "When two elephants fight in the savannah, they are likely to be injured, but one thing is certain: it is the grass in the field that suffers most." In a globalized world economy, the trade war between the world's two major powers threatens to produce great risks to other, developed, or developing countries. All the world's economic growth is threatened by the US – China trade war. For the Prof. Dr. Adrian CIVICI Dean, Faculty of Economic Sciences MEDITERRANEAN UNIVERSITY OF ALBANIA, UMSH

The trade war was also extended to monetary policy and exchange rates. In response to the "American attack" on Chinese exports, Beijing depreciated its yuan against dollar at a lower rate than in 2008, despite risks and losses, such an action posed to attract foreign investments and capital flows into the Chinese economy.

was "breaking the rules", by putting itself on a mission of "restoring trade balance" between the two biggest superpowers on the planet, thus "giving a lecture to Beijing."

But what the “Chinese exaggeration" was all about? In the WTO context, but also in the frame of bilateral relations between US, or EU, China has often been accused of "having a very specific, personal concept of a market economy" for "mass subsidy practices for business and corporations, by guaranteeing them significant portions of public markets," "evident dumping practices," "the obligation imposed on foreign companies investing in China to donate their technologies to China," "non-transparent policies with trademarks and patents, especially in the field of high-tech,” “for purchasing foreign corporates through state funds, in order to dominate and control the market”, etc. The US response is a direct "iron hand" confrontation against Beijing, with the logic that "we will tax them more and more until they behave correctly."

The "war" began with a 25% increase in the tax on steel imports and 10% on imports of aluminum. Mr.Trump said "over 1,300 Chinese products will be taxed." Beijing responded immediately with a list of 128 U.S. products that would be taxed at 15-25%. That's how it started. Tax, and counter taxes, and vice versa ...! By August 2019, the value of the taxation of Chinese

products exported to the U.S. exceeded US$ 300 billion; China responded to this "table tennis" with a tax figure on US exports to China of over US$ 110 billion. In addition to over-taxation, US and China have also waged a trade war by blocking imports and exports between them of many typical products and services, especially US agricultural products. It also extended to technological territory. The US banned US telecommunications networks from selling equipment in China, especially to Chinese telecommunications giant Huawei, by considering it a "threat" to US security. As a direct consequence of this "technological war", Huawei's high-tech smartphone models would not be able to access Android systems and would therefore be deprived of Google apps. The rivalry also extended to network giants: Google, Amazon, Facebook, Apple and their Chinese equivalents: Baidu, Alibaba, Tencent, Xiaomi.

But the trade war was not enough; it was also extended to monetary policy and exchange rates. In response to the "American attack" on Chinese exports, Beijing depreciated its yuan against dollar at a lower rate than in 2008, despite risks and losses, such an action posed to attract foreign investments and capital flows into the Chinese economy. This action significantly reduced the effect of US customs taxes. The Americans immediately described the Chinese state as a "currency manipulator". The central banks of India, New Zealand, Thailand and the Asian monetary markets were immediately involved in such vortex. At the same time, the FED announced a cut in key interest rates, a move it had not made since 2008.

This "war situation" with

"attacks and counterattacks" continued throughout 2019, with almost no sign of any "trade and economic peace" between these world powers. But who won and who lost in such trade war? Beyond the US and China, what are the consequences and impacts of this trade war on EU countries, other Asian countries, in Africa and Latin America, or even in the Western Balkans and even Albania?

In the US, a significant proportion of Chinese importing and exporting corporations began to suffer such aggressive trade policy. US powerful industrial and agri-food groups have publicly urged the Trump administration to end punitive tariffs on steel and aluminum imports; US meat producers complained of losing over a billion US dollars within months; soybean producers reported a loss of 77% of their profits, as a result of Chinese punitive tariffs on US exports; the US government was forced to pay its farmers US$ 28 billion in "aid" to offset the loss of trade relations with China; according to the University of California, the trade war would cost about US$ 70 billion a year to American consumers, or US$ 225/person, etc.

Even China suffered significantly from this "trade war" situation. It is estimated that China has lost about 5 million jobs and over US$ 35 billion from this situation. After taxing, in response to the American attitude, several thousand US products, and suffering, more or less, the same effects as the American economy, Beijing "surprised" with the introduction of the "monetary weapon" into the battlefield, by embedding currency war with the trade war. This policy consisted in lowering the value of the Chinese currency against the US dollar, so that Chinese exports would become cheaper and more competitive, by nullifying, to some extent, the effects of additional US tariffs. But such Chinese move, in addition to the backlash from the US, caused panic in the financial markets, which feared that this war between the world's two largest superpowers could cause side effects to Europe's economy and financial and monetary stability and BRICS countries (Brazil, Russia, India, China, South Africa).

There were major concerns in Europe, as well, so far as to declare that "Europe would be the great loser of this China-US conflict." The China – US currency war and the mutual depreciation of their currencies, the USD and the yuan, could provoke a rise in the value of the Euro, lower the competitiveness of its industrial exports, posing the risk of an open war on import – export sector of automobiles and agri-food products, increasing the risk of recessionist tendencies. The US president has stated that "the EU is as bad as China", by implying that an open US – EU trade war could be imminent, over the horizon.

Meanwhile, in the list of beneficiaries of this situation are the emerging countries, such as: Taiwan, Mexico, Japan, South Korea, Canada, Turkey, Vietnam, India, Bangladesh, Indonesia, Singapore, Russia, another large group of CNUCED member countries, etc. Their benefits stem from factors, such as: increasing their export and import opportunities in the US and China; the de-localization of a large number of manufacturing companies in these countries, which leave China, or the US, to escape trade sanctions; job growth in export-related sectors; more massive attraction of foreign direct investment, etc.

OBJECTIVE 5 The bank supported the organization of the second edition of Jazz NYOU Festival, where all the proceeds of the festival went to "Shelters for Women and Girls" organization.

OBJECTIVE 17 The Bank undertook numerous earthquake-related initiatives, such as: distribution of emergency aids, event organizing and donations distribution to more than 80 children, accommodated in Durrës city hotels, ticket purchases at the Charity Concert: "You'll never be alone." With the support of Alpha Bank Group, funds were transferred to the emergency funds account, where the allocated fund for holiday baskets for associates, was also transferred there. A number of initiatives were also undertaken by the bank's Human Resources Department for the staff affected by the earthquake of November 26 th . Awareness Campaign, by joining the Symbolic Walk in Tirana, in October, under the motto: "Pink Ribbon Reminds Me"! • The charity concert, in support of "Pink Ribbon", by Ermonela Jaho, the YWCA Ambassador for the Pink Ribbon Cause, on October 22nd. Proceeds from this concert went to the YWCA for the establishment of a psychosocial and legal center for women and girls affected by breast cancer and their families.

OBJECTIVE 4 The Bank supported:

• The organization of the 7 th meeting of the Albanian Network for Financial Education (ANFE), November 13 th . • The training event: “The Road to Success”, by Vasil Naçi, November 8-10 th , 2019.

OBJECTIVE 11 ABI Bank supported, for the third consecutive year, the Ethno Vibe Museum of Style, organized on the occasion of Cultural Heritage Day, on September 28 th , at Korça Bazaar.

OBJECTIVE 2 The bank, in collaboration with Food Bank Albania, undertook the voluntary “Food Donation” initiative, by collecting 2.5 tons of food products, distributed to 125 families in need.

OBJECTIVE 3 The Bank supported:

• The Fifth Congress: "Care during pregnancy and childbirth", October 24-26 th , in Tirana. • “Hope Albania” for the Halloween 70s theme party, a party to combat the stigma and discrimination that exists for the mental health in Albania. • For the third consecutive year, the Breast Cancer Early Discovery OBJECTIVE 17 The bank provided financial support of the 41 st International Conference of Commissioners for Data Protection and Privacy, on October 22-24 th , in Tirana.

ART, SPORT AND CULTURE ABI Bank was the general sponsor of the 21 ST edition of the International Theater Festival, at “Skampa” Theater, Elbasan, in October 10-17 th .

OBJECTIVE 11 Interest-free financing for the homeless of the earthquake of September 21 st and November 26 th 2019 is a product that BKT aims to

provide to the affected individuals in Albania, in the form of real estate purchase at an agreed price between parties, lessor and lessee, whereby the client agrees to use the property in exchange of the lease with a fixed term, during which, the lessee will pay the rent to the bank.

OBJECTIVE 3 • The 4 th edition of 1/2 and 10K Tirana Marathon welcomed runners from 42 different countries around the world, along with BKT staff. • Donate blood, save life! BKT, together with its staff, decided to be close to people who need blood. • Down Syndrome Albania Foundation’s representatives attended the sale of postcards designed with paintings from children diagnosed with Down Syndrome at BKT's headquarters.

OBJECTIVE 4

• University of New York Tirana (UNYT) welcomed BKT in its premises to present to the students of university the latest collaboration project. Thanks to this agreement, BKT will offer to UNYT’s best students 10 scholarships and 20 paid internships, for every academic year. Furthermore, the recruitment process will be finalized with the employment of students. • "Aleksandër Moisiu" University Durrës (UAMD), organized the graduation ceremony of students form the Faculty of Integrated Studies with Practice (FASTIP). As a gift from BKT to graduates and their parents for this year 2019 - the employment of 14 students in the period July - September 1st, much earlier than graduation! • Banka Kombëtare Tregtare donated different furniture to be used in different public schools, and

by purchasing new equipment: 2 PCs, 2 Laptops and 3 printers for Kamëz Education Office (KEO). • BKT supported “Luigj Gurakuqi” University, Shkodër, in organizing the workshop: "On Challenges of Regional Development". • “Pëllumbat” Developing Cen-ter. Children of "Pëllumbat" Development Center celebrated again the year-end holidays together with BKT staff.

OBJECTIVE 2 • Credins Bank, along with its staff, organized a food donation on the occasion of World Food Day, together with the Albanian Red Cross. • Credins Bank covered the expenses of some SOS Village children, by giving them more opportunities and investing in a happy home.

OBJECTIVE 3 The bank supported: • “Queen Geraldine” Maternity Hospital, by purchasing beds for operating room. • Projects to improve working conditions, most notably: Vlora Regional Hospital, where it sponsored the purchase of 5 Chemotherapy chairs, and in Durrës to improve premises of the Maternity Hospital.

OBJECTIVE 4 On International Savings Day, Credins Bank decided to be with students at “Edith Durham” Elementary School, with the participation of Mr. Rinald Gjyli, Deputy Director of the Treasury.

OBJECTIVE 9 The bank supported: • “Ihsan Cabej” Hospital, for the restoration of its premises.

• Land Forces Command, in upgrading the infrastructure. • Health Center No.1 and KodërKamza Health Center, for the restoration of their premises. • Fier Education Directorate and Fier Regional Education Directorate, in improving their premises. • Dibër District, to improve the infrastructure and working and premises’ conditions. • The purchase of computer equipment for Kamza Local Education Office. • “I'm from Tirana”, a show by Kujtim Prodani, held at the “ArTurbina Experimental Theater”. • “Partizani” Association VOLLEJ, Men. • "Mandarina Fest 2019" event. • The cultural event: “Cult Awards”.

OBJECTIVE 17 Credins Bank sponsored the American Chamber of Commerce, in organizing the Thanksgiving Day. Also, the bank supported Shkodra Local Education Office, in celebrating its year-end activity.

ART, SPORT AND CULTURE The bank supported: • Mi nistry of Agriculture and Rural Development in organizing the fair: " Albania Soils Land". • Na vy Command, in the organization of the Official Ceremony, on the occasion of the 94th anniversary. • IT CS Media and activities that support the promotion of the most innovative startups in Albania, Kosovo and the region. The bank was the main sponsor of Uplift Albania, the largest accelerator in the country for the most innovative startups in Albania, Kosovo and the region. • "A leksandër Moisiu" University, Durrës, in the organization of graduation ceremony of students. • Mi nistry of Europe and Foreign Affairs and also provided the awards for the event: “Colors of Albania”. • Sk rapar Municipality, by sponsoring the organization of the event: “Skrapar in a glass”. • Th e 11th edition of Bunk'Art Festival. OBJECTIVE 3 • On October 2nd, Fibank Albania joined Red Cross Albania, by organizing a day of blood donation at its main premises. • On October 13th, 2019, Fibank Albania became part of the 4th edition of Tirana Marathon 10 and 21K. • All funds raised during October, including those donated by the bank, went for a Fibank staff member, who is battling with such a disease, in order to support the colleague’s journey in defeating this illness. • Fibank, for the second consecutive year, sponsored the show: “Dance with Me” on Klan TV. • Fibank sponsored MamiCare, first social center project for mothers and their newborns in Tirana.

OBJECTIVE 4 • Fi bank Albania, in collaboration with EPPC training company, conducted a training throughout October for Bank's sales force training on: “CLIENT EXPERIENCE - a life relationship”. • Cy berCon Albania/ October 10th, 2019. The content of such education must be relevant, with a focus on both cognitive and non-cognitive aspects of learning organized by the

Canadian Institute of Technology in collaboration with ICT Academy and Ecronex Media. • Fibank internal departments organized training on: “Cash and operational procedures”, about latest updates and their adaptation. • On November 2nd, the staff was trained on AML, ASD, operational risk management, banking transactions, news on bank cards, information security & information technology. • Fibank supported the recital concert: "The Other Side of Me", at “Bylis” Theater, Fier on December 19th, 2019.

OBJECTIVE 8 &11 • Th e UN International Day of Older Persons/ October 1st, 2019. The theme for 2019 was: “The Journey to Age Equality”. Fibank wished all his gold age customers with kind gesture of contributing funds into their pension bank accounts by wishing them good health and wellbeing. • Ne w Branch Opening at Bulevardi “Zogu I”. This branch was launched with a special consumer loan product with Zero commission on disbursement specifically for all the new Fibank customers of that area.

OBJECTIVE 17 • #Takohemi ne…/ October – December 2019. The new partnership of Fibank Albania with Globus Travel to bring a great opportunity to customers to book their travel holidays with zero interest rates for these types of consumer loans. • On D ecember 11, Fibank Albania signed a partnership agreement with Rural Credit Guarantee Foundation in Albania.

OBJECTIVE 1

• Bank employees supported the SOS Village initiative, for the second consecutive year, by purchasing 222 charity cards prepared by children, themselves. • The Bank provided a donation to the General Directorate of State Police, on the occasion of the year-end festivities, organized to support the families of 226 police officers who have fallen in the line of duty. • Bank employees, in cooperation with the Albanian Red Cross, voluntarily collected a significant amount of clothes for children and adults.

OBJECTIVE 2 Th e bank partnered with “Food Bank Albania”, to help all families in need. The bank employees of Tirana, Durrës, Shkodra, Lezha, Kavaja, Fier, Lushnja, Elbasan and Korça, donated 760 kg of food.

OBJECTIVE 3 Employees of Intesa Sanpaolo Bank Albania joined, for the 11th consecutive year, the "Safe Blood for All" initiative, in cooperation with the Albanian Blood Bank.

OBJECTIVE 4 • Intesa Sanpaolo Bank Albania supported, for the second year in a row, the competition: “Big Data Analysis”, organized by EESTEC Tirana, attended by students from Tirana universities. • On the occasion of World Savings Day, October 31st, 2019, the bank joined, for the third year in a row, the successful international initiative: "The Art of Savings" by Intesa Sanpaolo Group & Museum of Savings (Museo del

Risparmio), Gallerie d 'Italy & Historical Archive.

OBJECTIVE 9 Th e Bank supported the Albanian Robotics Squad, which represented the country at the FIRST Global Challenge, held in Dubai on October 24-27th, where 5 young people introduced the robot created by them and reached the final stage, where they won the second place: "Clara Barton Award for Helping Hands".

OBJECTIVE 10 Th e Intesa Sanpaolo Bank Albania team of 35 employees participated at the 4th edition of Tirana Marathon on October 13th, 2019. The employees’ participation served as a direct contribution to support the UNHCR campaign: “2 Billion Km for Security”, in support of refugees.

OBJECTIVE 17 Fo llowing the earthquake of November 26th, 2019, the bank immediately took measures to assist the affected families. Commissions for all deposit accounts opened to help earthquake-affected families, whether from state institutions or NGOs, were all lifted up. Special financial schemes were designed for citizens and legal entities affected by the earthquake. Also, employees of Fier and Lezha branches donated aids to families affected by the earthquake. Bank’s employees voluntarily contributed to the fundraising accounts for those affected by this natural disaster.

OBJECTIVE 1 Raiffeisen Bank joined all citizens and institutions’ initiative to support people affected by the devastating

earthquake. The bank's staff, through the initiative: "Raiffeisen for Albania", reached out to all the injured families, by donating food, clothing, blankets and other help needed to pass difficult days.

OBJECTIVE 3 Raiffeisen Bank supported Berat Regional Hospital in the important project of improving hospital facilities, especially the surgery unit. Another project, supported by the bank, was the partial reconstruction of Korça Regional Hospital.

OBJECTIVE 4 • Th e beginning of the new academic year, found the Faculty of Economics at the University of Tirana with a new computer lab, supported by Raiffeisen Bank. • Ch ildren of "Buzëqeshja" kindergarten in Gjirokastra started the new educational year with new and very comfortable facilities, thanks to the support that Raiffeisen Bank provided to Gjirokastra Municipality, for the complete reconstruction of kindergartens.

OBJECTIVE 9 Raiffeisen Bank supported: • Fo r the fourth consecutive year, AllWeb, the digital marketing conference. • Th e first edition of Tirana Tech Open 2019, which focused on fostering innovation and creativity in the technology services sector.

OBJECTIVE 11 Raiffeisen Bank supported Tirana Municipality for “Student Card” project, by offering a package of free services to all young people who have a student card.

ART, SPORT AND CULTURE Raiffeisen Bank supported: • The drama: "Angels of America".

• “Alles Walzer” Grand Gala. • Charity Concert: "You’ll never be alone". • “Zizel” Ballet. • “Die Fledermaus” operetta. • “The Three Tenors” Concert. • "Tennis Tirana" Association, in the project: "Sport for Health". OBJECTIVE 3 Tirana Bank supported "Tirana Marathon", an annual event with ever-increasing role, in terms of runners’ participation.

The OTP Group announced a personal contribution of EUR 500,000 to relieve the damages and help people affected by the strong earthquake of November 26th, 2019. At the same time, a fundraising campaign was launched, at the group level, through which each OTP subsidiary office could make a personal donation. The Hungarian Red Cross is collecting private donations to help earthquake victims. Donations will be spent on assistance in daily supplies and long-term reconstruction of affected areas.

OBJECTIVE 1

• Following the Poka family's case broadcast at "Stop" show, about their difficult living conditions, Mr. Mane, Balfin Group President, reacted immediately by donating a house, owned by Tirana Bank. • Tirana Bank, with the mission to support families in need, has been close to children in the Vora area, whose families were affected by the earthquake this year. In cooperation with the Red Cross, an initiative was taken to organize a New Year's celebration for 50 children. OBJECTIVE 7 Union Bank presented, at the third edition of the Energy Expo & Forum 2019 fair, October 4-5th, the Savings + loan, which is dedicated to those individual clients who wish to invest in their homes. Union Bank offers this product in cooperation with the EBRD.

OBJECTIVE 9

• Union Bank entered into an agreement with Rural Credit Guarantee Fund (RCGF), on December 11th, 2019, aimed at expanding and facilitating access to finance for Albanian entrepreneurs and farmers. • EBRD signed the Risk Sharing Agreement with Union Bank. Albanian companies will gain better access to finance, thanks to the EUR 30 million risk-sharing arrangement, that Mrs. Charlotte Ruhe, Regional Director for Central and Southeast Europe, EBRD, signed with Mr. Gazmend Kadriu, CEO of Union Bank.

OBJECTIVE 10 During December, Union Bank launched the campaign: "Charity with Union Bank’s Cards". This awareness campaign helped in fulfilling the wishes of SOS Village children for year-end holiday gifts.